A new Deloitte analysis forecasts global spending on defense programs to grow about 2.8 percent in 2021 as countries continue to build up their military capabilities in response to increasing geopolitical tensions amid the COVID-19 pandemic.
“In 2021, defense budgets and revenues for defense contractors are expected to remain largely stable, as military programs continue to be critical to national defense, especially when geopolitical tensions are considered,” Deloitte said in the 2021 aerospace and defense industry outlook.
Space investments reached $12.1B during the first half of 2020 and Deloitte said it expects such investments to stay solid next year. Space launch services and space exploration are expected to post strong growth in 2021 driven by technological advances and reduction in launch costs.
Mergers and acquisitions are likely to recover in 2021 as aerospace and defense companies pursue long-term growth.
“Companies in specific A&D segments are likely to pursue M&A to build scale, whereas others could initiate vertical and horizontal integration strategies to capture more value, drive cost-competitiveness, or acquire targeted niche capabilities and emerging technologies,” the analysis reads.
Deloitte expects hypersonics, advanced air mobility, hydrogen-powered aircraft, electric propulsion and other emerging technologies to drive long-term growth and transform the A&D industry.